Newspapers have exploded this weekend with leaked documents pointing to high-ranking figures and organisations investing money in the Cayman Islands and Bermuda, calling them ‘tax havens’. One such organisation found in the so-called ‘Paradise Papers’ is the Duchy of Lancaster, of which The Queen is proprietor. Now, people are calling for apologies and donations, when in fact, Her Majesty has little to do with the running of this estate.
The Duchy of Lancaster provides The Queen with a private income, and has done so for Monarchs since the 1200s. The estate holds land across the UK (including most of Regent Street, the Savoy area of London, plus rural areas of Lancashire, Staffordshire, and Yorkshire) and the profits made by the estate help calculate the Sovereign Support Grant. 10% of its profits, two years in arrears, dictate how much the Privy Purse receives.
You can learn more about royal funding here.
“Founded in the 13th century, the Duchy of Lancaster is a unique portfolio of land, property and assets held in trust for the Sovereign in His or Her role as Duke of Lancaster” the website reads. (Yes, every Queen is also called ‘Duke of Lancaster’, thanks to Queen Victoria).
In the 13+ million documents that were passed to German newspaper Süddeutsche Zeitung, and then shared with the International Consortium of Investigative Journalists (ICIJ), there is information that the Duchy invested £10 million in the Caribbean, which ended up funding the Threshers off-license company, as well as the recently-fined BrightHouse higher-purchase company, described as not being a ‘responsible lender’ by the Financial Conduct Authority.
The investments were made in 2004 and 2005.
Nothing in the papers seems to point to illegal activities by those named, including singer Bono, who bought a Lithuanian shopping centre via a payment in Malta. Apple put its untaxed offshore cash in a Jersey bank account, while F1 star Lewis Hamilton managed to get a VAT refund on a £17 million jet (some £3 million) by importing it through the Isle of Mann. Politicians are also named in the documents.
These moves were all technically legal, but morally questionable.
But we come back to the crux of the issue – of course for us that is the royal-implication here: The Queen is not involved in the running of the estate at all.
I contacted the Duchy for a statement and they got back to me confirming this: “Yes, you’re correct [that The Queen isn’t involved in the Duchy].
“The Duchy is completely separate to the Royal Household. The Queen as Duke of Lancaster appoints a Chancellor and Duchy Council to administer the Duchy on Her behalf. In turn, the Chancellor delegates responsibility for functions such as asset management to members of Council.”
“In addition to this, Her Majesty voluntarily pays income tax on the money she receives from the Duchy of Lancaster.”
Her Majesty is not legally subject to tax, and doesn’t need to pay it. She has chosen to do so since 1993. Similarly, Prince Charles voluntarily pays tax on his income from the Duchy of Cornwall.
The Duchy’s official statement on the situation was this:
“We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate.
· The Dover Street investment was bought in 2005 and forms only 0.3% of the total value of the Duchy.
· The Duchy’s investment in Bright House is through a third party and equates to £3,208 – just 0.0006% of the Duchy’s value.
“The Queen voluntarily pays tax on any income She receives from the Duchy.”
While not a public body, because of the royal connection with Her Majesty, the Duchy is very careful in its workings, to ensure all laws are adhered to. It seems, then, that the financial advisors that serve the Duchy made a judgement error by choosing such offshore investments.
Of course there have been calls for apologies, investigations and donations to be made, and this is perhaps a good idea for those actually implicated in these loopholes, if they were a tax avoidance step.
Republican Emma Dent Coad – the MP who recently derided Prince Harry’s service in Afghanistan and claimed that Prince Philip cheated on The Queen – said: “The Paradise Papers reveal the extent to which the richest continue to prosper at our expense. It is an old saying but it is a true one: there is one rule for the super-rich and one rule for the rest of us.
“It is shameful that millions of pounds from the Queen’s private estate has been sent offshore whilst some in my constituency line up at food banks.”
Her boss, Jeremy Corby, said those involved in the ‘shocking’ Paradise Papers leak of secret documents should apologise if they have invested offshore to avoid tax and also ‘recognise what it does to our society’.
Now, had she done her research, she would have come to this conclusion: there may have been some questionable investments by a number of high-ranking figures and organisations, for whom we have a higher expectation – but The Queen? She’s not one of them.
What are your thoughts on this? A story blown up by the papers? Or reasonable criticism?